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THE COMING REGULATORY WAR OVER 5G Edward M. Roche, Esq.* L. Walker Townes‡ July 2017 ABSTRACT
* Law Offices of Edward M. Roche, 100 Pine Street, Suite 1250, San Francisco, CA 94111-5235 TABLE OF CONTENTS INTRODUCTION I. THE TECHNOLOGIES OF 5G
II. REGULATORY ISSUES FOR 5G III. PARALLELS WITH EARLIER DEREGULATION BATTLES IV. CHALLENGES FOR SMALLER CARRIERS CONCLULSION INTRODUCTION The next generation of mobile wireless technology will be called “5G”. From the name, it appears to be a continuation of previous generations of mobile telephony. The first generation (“1G”) of mobile telephones, “Car phones” started in approximately 1980. Introduced by Motorola, these phones operated as radios and used their frequencies in analogue mode. In the early 1990s, the second generation (“2G”) telephones were introduced. There was a transition to digital networking. The data rates for these phones was much less than 1,000 bits per second (bps). By the year 2000, a “2.5G” technology was introduced boasting significant performance improvements. Soon after, third generation (“3G”) phones were introduced. By then, data speeds had increased to between 10 and 100 thousand bps. This was a considerable improvement, as it was capable of transmitting limited video calls, and providing reasonable speeds for connectivity to the Internet. Improvements in digital coding of communication led to the introduction of “3.5G” in approximately 2009, and by 2012, introduction of the “3.9G” standard. By 2015, only a few years ago, the fourth generation (“4G”) standard was introduced, with a data speeds ten times higher. A. New Applications The new 5G architecture will make possible a number of new applications.4 It will be possible to enjoy “pervasive” video delivered wirelessly even in very dense areas such as a large sports event where every spectator is using a connected device. Broadband access is promised to average 50 Mbps or more in any location, even in rural communities. Users on transportation systems, such as high-speed trains, busses or other moving platforms also will be able to enjoy these high speeds. The Internet-of-Things (IoT) will connect together billions of devices and sensors. The latency (delay) of data in 5G networks will be only 1 millisecond (ms) or so, compared to 50 ms in current systems. This is important because minimized latency will make possible almost real-time communications, such as between driverless vehicles moving in tandem at relatively high speeds, or for applied virtual reality.5 Drones will use 5G for navigation, including scenarios in which it is necessary for authorities to respond to natural disaster. 5G promises communications reliable enough to be used in health-care, including for linking together doctors with remote surgical robots deployed to assist emergency patients. The number of potential applications is astoundingly great, all made possible by the very high speed of “millimeter wavelengths” (mmWaves), and their response time. It is estimated that within a few years, tens of billions of devices will be connected.6 I. THE TECHNOLOGIES OF 5G In order to appreciate how 5G will change the landscape of telecommunications, it is necessary to examine the technologies that make up its foundation. A. Use of Millimeter Wave Frequencies The most distinguishing feature of 5G is its use of very high frequencies. In the United States, the overwhelming majority of communication systems work at frequencies below 3 Gigahertz (GHz). For 5G, however, there are 5 bands that will be used; four unlicensed, one licensed. In particular, the licensed LMDS7 band offers approximately 1.5 GHz bandwidth between 27.5–31.5 GHz. There is a second band of 7 GHz that will operate in the 57–64 GHz range. This band already is being used in some Wi-Fi equipment under the IEEE 802.11ad standard. Finally, the “E-Band” is composed of three segments of bandwidth totaling 12.9 GHz, and also is unlicensed. 1. Water and Oxygen Absorption These high frequencies are vulnerable to being absorbed by water moisture in the air, and at some frequencies by oxygen. The 22 and 183 GHz frequencies are vulnerable to being absorbed by water. The 60 and 118 GHz frequencies are vulnerable to absorption by oxygen itself.8 In other words, if it is raining, mobile communications using 5G frequencies might be interrupted or degraded.9 2. Inability to Penetrate These high frequency waves (“mmWaves”) also lack the ability to penetrate the walls of buildings, or even to get through dense vegetation, such as a forest, or even a row of trees. As a consequence, if the current physical infrastructure of 3G/4G were simply reused for 5G, nothing would work because mmWaves have a much more restricted range of propagation. In practical terms, the distance between the antenna and the receiver, between the cell tower and the mobile device, must be greatly reduced. B. Mini-Cells and Reuse of Spectrum As mentioned, in order to cope with the smaller propagation distance of mmWaves, the distances between antennas and mobile devices (“User Equipment”) must be dramatically reduced. For example, if in the normal world of 4G cellular telephony, a single antenna tower can cover an area of several square miles or more, with mmWaves, the same tower might be able to cover only a city block or less. C. Intelligent Antennas – MIMO and Beam Shaping The emerging 5G architecture also allows re-use of bandwidth from the antenna tower. In previous generations of mobile radio technology (1G–4G), any emitted signal is propagated 360° in all directions. In the 5G world, “Massive Multiple-Input Multiple-Output” (MIMO) technology is used. D. Frequency Hopping and “Multi-Mode” Communications Another innovative aspect of the new 5G architecture is the bleed-over between licensed and unlicensed spectrum. In the United States, only the LMDS band between 27.5 and 31.5 GHz is licensed.12 This accounts for approximately 1.5 GHz available bandwidth. But there are at least four other bands allocated for 5G. These are much larger than the licensed LMDS band. The E-Band is composed of 12.9 GHz operating at 71–76, 81–86, and 92–95 GHz. There is another band of 7 GHz operating at 57–64 GHz. 1. Hopping So out of a total bandwidth of 21.5 GHz allocated to 5G in the United States, only 1.5 GHz, a little less than 7% is licensed. Since unlicensed frequencies are notoriously congested, the 5G architecture is being designed so that instead of remaining tied to a single frequency band, the new radio access technology (RAT) will have the capability of jumping from one frequency to another as needed. In this way, data traffic always will be moving along the least-congested pathway. 2. Multi-Mode The 5G architecture also is being designed to leverage bandwidth that is completely outside of its allocation and substantially slower. For example, it is envisaged that at the same time 5G frequencies are being used, User Equipment (UE) potentially could be accessing the 4G network as well as Wi-Fi.14 In essence, allocation of bandwidth and speed dynamically can be adjusted to the type of application being used, e.g., fast for 4K video, slow for passive sensors.15 E. The New Architecture of 5G Because of the massive amount of new bandwidth being made available, the projected extreme growth in the number of connected devices, the wide range of applications to be supported, and the different quality-of-service (QoS) characteristics of different uses, the 5G architecture is being designed in a way never seen before.16 Some of the principle differences between the architecture of 5G and its predecessors include: 1. Separation of Infrastructure from Network Services In the 5G world, different network infrastructure systems such as towers, antennas, the Radio Access Networks (RANs), various access nodes feeding the RANs, the core networks, as well as data centers that may supply cloud services to User Equipment (UE) are separated into a “Physical Resources” layer. As a consequence, there is no underlying assumption that the physical infrastructure will be owned or operated by the same entity. Instead, these computational, storage and connectivity resources are considered to be “logical—virtual resources” that can be harnessed as needed according to higher-level management functions in the 5G architecture. 2. Software-Defined Networks (SDNs) Provisioning of network services will be done through a “virtual” network system that will translate user requirements into instructions that will be used by “virtual infrastructure managers” to harness as needed the relevant parts of the physical infrastructure. Since this is, in effect, a complete separation of provisioning from its relationship with the infrastructure, the network itself becomes a type of abstract concept. F. Network Distributed Artificial Intelligence (NDAI) There are a large number of management functions that by necessity will be an integral part of 5G. The infrastructure must constantly be monitored to ensure efficient operation, fault management must be in place, configuration management must be programmed to work properly, and performance management will be crucial in ensuring that applications receive the proper prioritization. 1. Modular and Open Source These many different functions in the 5G schema are modular in nature, and many are open source.17 In this approach, when it is time to provision a network, there will be not one, but multiple entry points into the system. Performance metrics and network management will not necessarily be performed by the same application or supplied by the same vendor. Rather than traditional telecommunications carrier acting as an intermediary between provisioning of the physical infrastructure and the customer, instead it will be possible for customers to directly requisition virtual network resources. In addition, the separation of physical infrastructure means that it will not even be necessary to understand the details of the network, only to specify the requirements. II. REGULATORY ISSUES FOR 5G In the previous discussion, we have described the emerging nature of 5G and shown how the unique characteristics of these higher frequencies have forced a complete re-thinking of how mobile networks are going to operate and be managed in the future. It appears, however, that this new architecture will raise a number of questions of a regulatory nature. A. Sharing of Infrastructure The 5G architecture assumes that physical infrastructure will be shared by the higher-level network provisioning system. This would mean that a “virtual” or Software-Defined Network would be set up without regard to which company was providing the transport. 1. Forced Sharing Will physical infrastructure providers, including the major carriers, be forced to share their infrastructure as needed? If so, then how will pricing be determined? What implications do forced sharing policies suggest for the concept of property? Are there precedents where companies are forced to share their infrastructure? Do all carriers or network suppliers have a “right” to access all of the available infrastructure? Should they have this right? 2. Forced Access to Network Control Up to this point in telecommunications history, each major carrier has owned, operated and maintained its own network control center. In a sense, this centralized network control was the essence of carrier autonomy over its provisioning and business models. B. Cost Sharing and Billing If virtual networks will rapidly come and go, be built-up and then torn-down, then how will pricing be determined? Will it be regulated? If not, then will it be arranged in a way that is completely open market? How will prices be measured and monitored? If the service being accessed is from a “physical infrastructure” provider, then how will prices be set? What is to stop abusive price gouging, or major carriers beating down the prices to below their cost? Are all services going to be priced equally? For example, if 4G services are integrated with 5G mmWave applications, then will pricing be the same as if either mmWave or 4G were priced separately? C. Open Systems and Open Innovation Will regulations be put into place that will ensure a continued stream of innovation? Suppose a start-up creates a completely new type of billing system, is the infrastructure provider going to be compelled by regulation to open up access to their system? Will users be forced into using only the set of modules that are being bundled by their provider, or will they be able to “mix and match” modules from different suppliers so as to best meet their priorities? III. PARALLELS WITH EARLIER DEREGULATION BATTLES Although the new and emerging 5G architecture presents with many thorny issues of regulation, the break-up of the Bell System in the United States and much of the deregulation that followed has set in place a liberalizing framework that can set a context for 5G. A. The Competitive Telecommunications Market in the United States The United States over time has developed a competitive model of telecommunications. This competitive model is based on open access to the infrastructure of the telecommunications network by different companies, including competitors. For example, in any telecommunications network, it is possible to use equipment from any manufacturer. The only requirement is that it is certified by the Federal Communications Commission. It also is possible to make a choice between different local service companies. Even the underlying logic of a tariffed service has been challenged by a liberal policy that allows making telephone calls from one’s computer. Finally, competing telecommunications companies are forced to cooperate with each other to provide “number portability”, the ability to retain one’s telephone number even when moving from one carrier to another. 1. Kingsbury One of the first skirmishes in this battle was a disagreement over AT&T’s control over both telegraph and telephone service. In the Kingsbury commitment18, the Chairman of AT&T agreed to abandon (“divest”) the investments it had been making in local telegraph companies.19 In addition, AT&T agreed to allow independent telephone companies to interconnect with its long distance network. This was a very exciting time for telecommunications in the United States. Many telegraph and telephone companies were being created, but this wave of innovation was being throttled by the persistence of AT&T in acquiring controlling interests in one company after another. 2. 1956 Consent Decree By the mid-1940s, the government was receiving complaints that AT&T and its manufacturing arm Western Electric were engaged in a “conspiracy” to monopolize the market for telecommunications equipment, including manufacturing and sales. In 1949, the U.S. government filed a lawsuit against AT&T and Western Electric. In the suit, it demanded that the manufacturing arm, Western Electric be separated from AT&T. The result was the “1956 Consent Decree” in which AT&T promised to keep its businesses within regulated areas. Again, AT&T avoided a lengthy court battle, but the practical effect on the market for telecommunications was insignificant. AT&T continued to go about its work, and the record shows the persistence of a number of anti-competitive activities. 3. Hush-a-Phone The Hush-A-Phone case23 marked one of the first cracks in the unified and impenetrable network that had been built by AT&T. The Hush-a-Phone was such a simple device. It had no electric circuitry at all. It was merely a small cup-like object that could be mounted to the microphone on a telephone. It was capable of increasing the quality of sound transmitted to the party listening, and it also enabled one to keep their conversations confidential. At this time, telephones were not owned by the customer, but instead were leased from AT&T. It was claimed that AT&T had the right to “forbid attachment to the telephone of any device not furnished by the telephone company.” At first the FCC agreed, and with reference to the 1934 communications act held that the Hush-a-Phone was a “foreign attachment” that could be controlled by AT&T with a view to preventing the deterioration of telephone service. Hush-a-Phone then went to the Federal Court of Appeals in Washington, DC and won. The court ruled that placing a tariff on the Hush-a-Phone device was unwarranted interference with a telephone subscriber’s right to reasonably use the telephone in ways which are privately beneficial without being publicly detrimental. 4. Carterfone The Carterfone case is another example of anti-competitive activities by AT&T. The Carterfone was a device connected to a two-way radio. If one placed the hand-set of the telephone onto the Carterfone, it became possible for the conversation to utilize a radio-communications link. AT&T argued that the device was prohibited because of its uniquely regulated rate structure. The inventor first sued in Federal Court under the anti-monopoly laws, but the case was referred to the Federal Communications Commission, which ruled that the Hush-a-Phone rule should be followed, thus allowing this interconnection.24 5. Execunet I & II Microwave Communications, Inc. (“MCI”) was building a series of microwave relay stations between Chicago, Illinois and St. Louis, Missouri. The original plan was to provide a way for truckers using limited-distance radios along Route 66 to communicate to local microwave towers. The service was called “Execunet”. Eventually, MCI applied to interconnect its network with AT&T. This would allow its customers to originate and receive telephone calls with fixed-line customers. a. Execunet I b. Execunet II B. Breaking Up AT&T In the mid-1970s, AT&T was the largest company in the world, and had more employees in the US than any other company. The U.S. Department of Justice filed another lawsuit26 against AT&T. The suit alleged continued anti-competitive behavior by AT&T. Examples included the use of its monopoly power to kill off a company, controlling access to the Bell Operating Companies (BOCs) in a way that blocked competition in the long-distance market, and using revenues from its fixed-line business to gain advantages in competitive markets including manufacturing and long-distance. The Bell Operating Companies (BOCs) held monopolies in their local markets, and this, according to the government, by extension was the source of the monopoly power of AT&T. C. Deregulation and the Telecommunications Act of 1996 It can be argued that the effect on the market of the “Break-Up” was salutary. The market as a whole and number of long distance providers grew rapidly. An intermediary industry was established, providing access services that could directly link long-distance providers and businesses (e.g., a bank wishing long distance with lower prices).27 There also was explosive growth in wireless services. IV. CHALLENGES FOR SMALLER CARRIERS Smaller carriers must ensure that the daunting challenge posed by 5G does not leave them locked out of the market. History shows that when a market is characterized by entrenched players enjoying comfortable market shares there is less incentive to innovate. The top providers, Verizon and AT&T account for approximately $120-Billion/Year in revenues. When the third and fourth largest players T-Mobile and Sprint are added in, these four companies have sales of around $170-Billion/Year. The fifth largest carrier, US Cellular is 10% the size of Sprint which is the smallest of the top 4. Apart from the giants, the rest have revenues that are only a fraction of the top five. Over time, an ecology has developed in which the bulk of investment in build-out is made by the large players. When they lease infrastructure, these companies tend to drive hard bargains with smaller providers. A. The Townes Test If indeed there emerges regulation of the new 5G architecture, and its associated markets, then it must present a “win-win” scenario for all players, large and small. We can suggest the following test for the viability of any proposed regulatory regime.
CONCLUSION The new and emerging technologies of 5G present a radically new paradigm for telecommunications. It will change substantially the concept of a “telecommunications service” because networks will be “virtual.” But the full potential of 5G can be realized only if the potential for anti-competitive behavior by the dominant carriers is moderated by law and regulation. 1 In the European Community, roaming fees became the target of regulation under the “Single Digital Market” program. See e.g., European Commission, Statement, End of roaming charges in the EU: Joint statement by 3 EU institutions, Brussels, 14 June 2017. “The European Union is about bringing people together and making their lives easier. The end of roaming charges is a true European success story. From now on, citizens who travel within the EU will be able to call, text and connect on their mobile devices at the same price as they pay at home. Eliminating roaming charges is one of the greatest and most tangible successes of the EU.” 2 See e.g., European Commission, Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee of the Regions: A Digital Single Market Strategy for Europe, Brussels, COM(2015) 192 final, June 5, 2015. 3 Reference is made to Clayton Christensen, “Disruptive Technologies Catching the Wave”, Harvard Business Review, January, 1995, p. 3. 4 See, e.g., Javan Erfanian and Brian Daly, Eds., Next Generation Mobile Networks Ltd (NGMN), 5G White Paper, Frankfurt, Germany, Feb. 17, 2015. http://www.ngmn.org 5 For example, in a recent (May, 2017) demonstration at the Indianapolis Speedway, the carrier Verizon and equipment supplier Ericsson demonstrated a 5G application in which the driver of a car was fitted with virtual reality goggles, and shown the road ahead through a 5G transported video feed. All of the windows of the car were completely covered with black plastic sheeting, making it impossible to see outside. There was so little latency that the driver was able to successfully navigate the raceway. If older technologies such as 4G had been used, the car would have crashed because of the delay in video signals. 6 See also: Ericsson, 5G Systems: Enabling the Transformation of Industry and Society, WHITE PAPER, Stockholm, January, 2017. (Mentioning autonomous vehicle control, emergency communication, factory cell automation, high-speed trains, large outdoor events, massive numbers of geographically dispersed devices, media on demand, remote surgery and examination, shopping malls, smart cities, stadiums, teleprotection in smart grid network, traffic jam, virtual and augmented reality as well as broadband to the home. Id. at 4.) 7 LMDS — Local Multipoint Distribution Service. 8 See, e.g., E.E. Altshuler and R.A. Marr, A comparison of experimental and theoretical values of atmospheric absorption at the longer millimeter wavelengths, IEEE Transactions on Antennas and Propagation, 36:1471, 1988. 9 A graphic showing the complex frequency allocation map of the United States is available. See, e.g., United States Department of Commerce, United States Radio Spectrum Frequency Allocations Chart as of 2016, available at https://www.ntia.doc.gov/files/ntia/publications/january_2016_spectrum_wall_chart.pdf 10 These small “mini”-cells also are called “Femto Cells,” “Pico Cells,” and “Micro Cells.” See, e.g., Ciena Corporation, “Small Cell Technology, Big Business Opportunity,” WHITE PAPER, New York, 2015. 11 To picture this arrangement, one can think of a circle as representing a single antenna broadcasting 360° in all directions. In order to visualize MIMO, think first of a pentagon shape (5-sided), an octagon (8-sided) or dodecagon (12-sided). With MIMO, a Pentadecagon (15-sided) polygon might be more realistic. Here, each side of the 15-sided shape would represent a separate antenna broadcasting only in the direction of the face of the antenna. 12 A graphic showing the complex frequency allocation map of the United States is available. See, e.g., United States Department of Commerce, United States Radio Spectrum Frequency Allocations Chart as of 2016, available at https://www.ntia.doc.gov/files/ntia/publications/january_2016_spectrum_wall_chart.pdf 13 If this were so, it likely would significantly decrease the value of licensed frequencies. On the other hand, since this jumping is designed to take place only when spectrum is not being used, a counter-argument would be that is would make no difference, and consequently, there should be no effect on the value of licensed 5G spectrum. 14 See, e.g., Qualcomm, 5G — Vision for the next generation of connectivity, WHITE PAPER, March 2015. “Through its common single core network, 5G will support 4G and Wi-Fi access, as well as simultaneous 5G, 4G, and Wi-Fi connectivity with multimode devices enabling seamless introduction of 5G services, and protecting operators’ investments.” (emphasis added) Id. at 15. 15 Example: Electricity meters. 16 See, e.g., Robert Mullins and Michael Taynnan Barros, Eds., Cognitive Network Management for 5G: The path towards the development and deployment of cognitive networking, 5GPPP Network Management & Quality of Service Working Group, March 9, 2017; Ioannis Giannoulakis, et al., Enabling Technologies and Benefits of Multi-Tenant Multi-Service 5G Small Cells, WORKING PAPER, Project SESAME, European Union funded 5G-PPP project, n.d.; see also Redana Simone (Nokia Bell Labs) and Kaloxylos Alexandros (Huawei Technologies Dusseldorf GmBH), View on 5G Architecture, WHITE PAPER, 5G-PPP Architecture Working Group, Ver. 01, July, 2016. 17 Open source software is one of the technologies responsible for the success (rapid penetration and growth) of the Internet. There is a theory that explains why open source approaches and self-organizing systems are a better match for the technology world. See, e.g., Eric Steven Raymond, THE CATHEDRAL & THE BAZAAR: MUSINGS ON LINUX AND OPEN SOURCE BY AN ACCIDENTAL REVOLUTIONARY, O’Reilly Media, Inc., 2001. 18 N. C. Kingsbury, Vice President, American Telephone and Telegraphy Company, LETTER TO THE ATTORNEY GENERAL, (Dec. 19, 1913) (Available at http://vcxc.org/documents/KC1.pdf) 19 For a history of AT&T’s divestitures, See, e.g., John Pinheiro, AT&T Divestiture & the Telecommunications Market, BERKELEY TECH. L.J. 303 (1987) (Available at http://scholarship.law.berkeley.edu/btlj/vol2/iss2/5) 20 “Fixed” here means not mobile or wireless, although at this time in history, there were no radio telephones. 21 Example: GTE — General Telephone & Electric Corporation (1955–1982) (eventually purchased by Verizon). 22 Equipment from any other manufacturer could not be interconnected to the network. 23 Hush-A-Phone Corp. v. United States, 238 F.2d 266; 99 U.S. App. D.C. 190; 1956 U.S. App. LEXIS 4023 24 See e.g., In the Matter of Use of the Carterfone Device, 13 F.C.C.2d 420 (1968), 13 Rad. Reg. 2d (P & F) 597, June 26, 1968. “We agree with and adopt the examiner’s findings that the Carterfone fills a needs and that it does not adversely affect the telephone system. . . . [W]e hold, . . . that application of the tariff to bar the Carterfone in the future would be unreasonable and unduly discriminatory.” Id. at 423. 25 These two cases are D.C. Cir 1978 and 1977. 26 U.S. v. AT&T, D.C. Cir 1984. 27 Many multinational enterprises began constructing their own internal long distance companies linking together their various sites. 28 Voice mail, security services, long distances, possible manufacturing of equipment. 29 The long title was: An Act to promote competition and reduce regulation in order to secure lower prices and higher quality services for telecommunications consumers and encourage the rapid deployment of new telecommunications technologies. Enacted by the 104th United States Congress. It became effective on February 8, 1996. Citation: 110 Stat. 56, P.L. 104-104. It amended the Communications Act of 1934. “Conséquences de la téléphonie mobile de cinquième génération sur la télé-géographie” La nouvelle architecture 5G de la téléphonie mobile promet de révolutionner la manière dont le monde communique. La 5G rendra obsolète plusieurs méthodologies traditionnelles utilisées pour les études de télé-géographie et offrira de nouveaux vecteurs pour la recherche tant théorique qu’appliquée. [Get the original version in French here.] |
| Source: | Benjamin H. Dickens, Jr, Esq. |
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Benjamin H. Dickens, Jr, Esq.†
